Markets are keeping a close watch on the GAAR (General Anti Avoidance Rule) notification, corporate results and the foreign exchange reserves position, he added.
The Finance Minister, Mr Pranab Mukherjee, on Friday flagged the volatility in global commodity prices for the deteriorating balance of payment situation in the country which, in turn, is a major reason for the stress on the rupee. The landed cost of crude oil has already gone up sharply, leaving oil marketing companies in a tight spot.
Ever since Standard & Poor's downgraded India's sovereign outlook from stable to negative, market-men have lost confidence in India, said analysts.
Experts say the Nifty breaching the 200-day moving average is technically significant.
A drop below that level has the potential to trigger a fresh sell-off.
The weak opening of European markets aggravated the decline in the Indian bourses.
Though the market-men have attributed Friday's fall to FII selling, data posted by the exchanges after market hours show a different picture. Foreign investors, in fact, were net buyers for about Rs 428 crore. On the other hand, domestic institutions were net sellers to the extent Rs 280 crore.Much noise is also being made about FIIs turning away from the Indian market due to the uncertainty on GAAR. But if we consider the flows from these investors as published by SEBI, there was mild outflow of $82.7 million in April and inflow of $166 million in May.
The secondary market has received $8.5 billion so far this year.